Lloyds Metals & Energy is a company that is into the business of manufacturing of Sponge Iron, Power generation and mining activities. The company earns 83% of revenues from sales of Sponge Iron & steel and the rest 17% from power. It produced 167,000 MT of sponge iron in FY20 compared with 190,000 MT in FY19.
The company owns mining lease for over 350 hectares for Iron ore at Surjagarh Village in state of Maharashtra valid until 2027. It is also in the process of extending the mine for another 30 years. The iron ore production in FY20 was nil due to political uncertainties as the Central and state elections had impacted the security arrangements in the naxal affected area.
The estimated reserves of the mine are 90 million tonnes of iron ore out of which 74 million tonnes is proved and 16 million tonnes is probable.
The company owns one plant in Ghugus, Maharashtra with a capacity to manufacture 270,000 MTPA of sponge iron. It also facilitates a captive thermal power plant with a capacity of 30 MW of power.
The company has reduced debt significantly in recent years and is now almost debt free. This has led to a significant improvement in the company’s return on equity (ROE). The company’s ROE has been consistently above 70% in the last three years.
The company’s working capital requirements have reduced significantly in recent years, which will lead to improved profitability.
Overall, Lloyds Metals & Energy is a well-managed company with a good track record. The company is debt-free and has a good return on equity. The company is good for a investment for next 2-3 years.
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Disclaimer
The information contained in this is for informational purposes only and should not be considered investment advice. Past performance is not indicative of future results. The value of investments can go up or down, and you may not get back the amount you invested. You should always do your own research before making any investment decisions.
